Bank of England Governor Andrew Bailey, speaking as chair of the Financial Stability Board, has warned G20 finance ministers and central bankers that increasingly capable “frontier” AI systems could create serious risks for the global financial system. His main concern is cybersecurity: advanced AI could make cyberattacks faster, cheaper and more sophisticated, potentially allowing attackers to identify and exploit vulnerabilities across multiple financial institutions at the same time.
Bailey’s warning is particularly significant because financial institutions are deeply interconnected and often rely on shared technology providers and infrastructure. A successful AI-enabled attack on one system could therefore spread quickly across banks, payment networks and other financial institutions. He is calling for governments and regulators to establish stronger international protocols for the safe development and deployment of frontier AI, rather than allowing technological capabilities to advance faster than the systems designed to manage their risks.
The concern goes beyond cyberattacks. Bailey also pointed to existing financial vulnerabilities—including high leverage, inflation pressures and elevated investor optimism surrounding AI—that could amplify the consequences of a major disruption. If AI-driven enthusiasm has pushed valuations too high, a sudden shock could trigger a sharp market correction at the same time that financial institutions are dealing with an AI-enabled cyber incident. The combination could turn a technology problem into a broader financial crisis.
The message to the G20 is therefore that AI regulation cannot be treated purely as a technology-policy issue. Financial institutions need stronger cybersecurity, contingency plans and the ability to restore critical systems even after sophisticated attacks. Bailey has also emphasized that international cooperation is essential because AI and financial markets operate across borders. AI could significantly improve economic productivity, but without adequate safeguards, the same technology could increase the speed and scale of financial shocks.
